A repeated request by Oklahoma Lottery officials to change a state law that requires 35 percent of lottery earnings go to education didn't get much support Tuesday from a legislative panel.
Rep. Sally Kern, chairman of a House of Representatives budget subcommittee on nonappropriated agencies, said she opposes the idea because it would encourage more people to gamble.
“I would be hesitant to decrease it just to entice our people to gamble more,” said Kern, R-Oklahoma City. “Those that are going to gamble are going to gamble.”
Kern, who doesn't buy lottery tickets, said statistics show people who can least afford to gamble are more likely to gamble.
Rollo Redburn, executive director of Oklahoma's lottery, said eliminating or reducing the profit percentage to education would make prizes more competitive and as a result generate more money for education.
“If the requirement for the profit was lowered or eliminated, we would be able to put more money into the prizes; the players would respond to that and would be happier about the games having better prizes; they'd win more often, sales would increase; and our profits would improve,” he said.
All lottery profit is for Oklahoma education, he said, but the 35 percent profit requirement restricts prize payouts and doesn't encourage sales.
Bills seeking to lower the profit percentage to increase sales have been filed the past several years but have failed to advance.
The Oklahoma lottery has avoided reducing the prizes it offers for its games by reducing operating expenses, Redburn said. The number of employees has dropped from 38 to 28 in the past three years — by six in the past year — and it has reduced its annual advertising expenses from $5.8 million to less than $2 million during the past three years.
State law requires 35 percent of lottery earnings go to public schools, higher education, the teachers retirement system and the school consolidation fund. Latest estimates show education will receive $64.3 million this fiscal year from the lottery.
Overall earnings for the lottery are projected to be about $183.6 million for this fiscal year, which is down from $199.9 million a year ago.
Earnings for the 2014 fiscal year, which begins July 1, are projected at $168 million; education's share is estimated at $58.8 million.
Increasing operating expenses, along with the state requirement that 35 percent of Oklahoma lottery earnings go to education, have reduced the amount of prize money and the frequency of winnings for the Oklahoma lottery games, Redburn said. Sales of instant tickets, also called Scratchers, are declining mostly because the prizes haven't increased, he said.
If the 35 percent requirement could be lowered, lottery officials would introduce games with better payouts, which would improve sales and profits, he said.
“The existing minimum profit requirement restricts our ability to do that,” he said.
Redburn surprised committee members when he said the law approved by voters in 2004 setting up the lottery called for a legislative oversight committee. But the committee, to be made up of members from the House and Senate budget committees, never met, he said.
Kern said she would inquire into whether current budget committee members would meet to oversee the lottery's operations.
“We're talking about huge amounts of money here,” she said. “It's dereliction of duty to not take care of that.”